Oil futures continued to head south in early trading Friday, breaking below the $80 a barrel level and hitting their lowest point since Aug. 9.

Light, sweet crude for November delivery fell $1.71, or 2.12%, to $78.80 a barrel on the New York Mercantile Exchange. Brent crude on the ICE Futures Europe exchange dropped $1.09, or 1.0%, to $104.40 a barrel.

Analysts and traders said the market was still trying to get a feel for a floor in the price, after having broke through several technical levels over the last two days where they believed it should have held up. Some speculated the market could turn up later in the day, as traders cover short positions heading into the weekend.

"What we're seeing here is a selling off and testing the lows from back in the July-August time frame," said Les Klukas, a market analyst with Country Hedging. "I think you're seeing the final panic taking place. The market expected a bounce and it didn't happen."

Peter Donovan, a vice president and trader at Vantage Trading, said the Fed's gloomy economic outlook broadcast earlier in the week was continuing to drive market sentiment.

"Oil is seen as a bellweather market," Donovan said. "Industrial usage ties it to economic activity. Fears of recession and turmoil have crushed markets all around the globe, and the price of oil has had no choice but to follow."

Front-month October reformulated gasoline blendstock, or RBOB, was down 0.74 cent, or 0.3%, to $2.5526 a gallon. October heating oil dropped 3.15 cents, or 1.1%, to $2.8170 a gallon.